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Audit and Auditing Process

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Audit and Auditing Process
The Auditing Process
INTRODUCTION
Auditing is defined by the American Accounting Association or AAA as “a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users” (cited in Turney et al p. 108). From that definition, it is evident that the auditing process consists of three elements: evidence collection and evaluation; comparison of collected evidence with established criteria and; results-sharing with interested parties. In obtaining evidence for auditing purposes, a systematic approach is taken. A well-planned, logical approach is vital so that important aspects of the process are not missed or bypassed. On the other hand, the rationale behind comparing assertions of a firm and control structure is to determine the authenticity of those assertions and whether they truly reflect its transactions. Lastly, the most important aspect and end goal of the auditing process is to provide true and accurate information to interested parties, such as shareholders, creditors and investors, from which they will find basis in their future transactions and decisions involving the firm. The importance of the auditing process today, as defined above, cannot be argued against. It does not only ensure that firms keep track and control their financial activities, but it forms the rudimentary foundation of businesses and on a larger scale, the economy. Without the auditing process to ensure that the public put their trust on business entities and their activities, the economy will stagnate and perhaps eventually collapse.
THE HISTORY OF AUDITING PROCESS IN THE USA To understand just how important the auditing process is, it is necessary to trace its origin to have some inkling on why it has gained so much prominence today. Historical accounts show that the auditing



Cited: Anand, Sanjay. Essentials of Sarbanes-Oxley. John Wiley & Sons, 2011. Print. Byrnes, Paul Eric, Al-Awadhi, Abdullah, Gullvist, Benita, Brown-Liburd, Helen, Teeter, Ryan, Warren, Jr, J. Donald and Vasarhelyi, Miklos. Evolution of Auditing: From the Traditional Approach to the Future Audit. AICPA White Paper, 2012. Couch v United States 409 U.S. 322 (1973). Page, Stephen Butler. Achieving 100% Compliance of Policies and Procedures. Mansfield, OH: Policies and Procedures, 2000. Print. Pavel, Tobia and Encontro, Mylene. The Enron Scandal. Turney, Peter and Watne, Donald. Auditing EDP Systems. Pearson South Africa, 2002. Print. United States v Arthur Young & Co 465 U.S. 805 (1984). Wallace, Wanda (2005). ‘The Economic Role of the Audit in Free and Regulated Markets: A Look Back and a Look Forward.’ Research in Accounting Regulation, Volume 17, 267– 298.

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